Pension funds getting margin called....

[Lance]

Billions worth ... but no one complained as they didn't 'see' the effect straight away. The long term effect is starting to bite now as people look at how small their pension funds are.

it was only defined benefits he strip mined. And they are either paying out as expected, or gone bankrupt (like BHS, but Phili Green had more to do with crashing that than Brown). Defined contributions were safe from that pillaging.

At the time they DB funds were rolling in cash, that they would never need (cos the amount they pay out is known). So they were stripped of excess cash. Then came the 2007/8 crisis, Brextulip, Covid and now #Trusster****

Plenty did complain at the time. But they were people in the know.

[BlasterBates]

The funds were holding gilts. Gilts are/were 'safe'.
The banks did the margin call on the funds as the arse fell out of the gilts market.
Or that's what I gathered from some research googling last night.

IANAFC

No they weren't holding gilts they entered trades to buy/sell gilts at a future date at a given price i.e. derivatives. If the price moves too far they might not hold enough cash to cover the losses when the trades become due.

[Lance]

No they weren't holding gilts they entered trades to buy/sell gilts at a future date at a given price i.e. derivatives. If the price moves too far they might not hold enough cash to cover the losses when the trades become due.

ahh. ok/.

[Whorty]

it was only defined benefits he strip mined. And they are either paying out as expected, or gone bankrupt (like BHS, but Phili Green had more to do with crashing that than Brown). Defined contributions were safe from that pillaging.

At the time they DB funds were rolling in cash, that they would never need (cos the amount they pay out is known). So they were stripped of excess cash. Then came the 2007/8 crisis, Brextulip, Covid and now #Trusster****

Plenty did complain at the time. But they were people in the know.

I was talking about the tax credits on the investment returns/divs held by the pension schemes, including the DC ..... I thoughts this tax raid hit the DC pensions too? Happy to be proved wrong though.

[Lance]

I was talking about the tax credits on the investment returns/divs held by the pension schemes, including the DC ..... I thoughts this tax raid hit the DC pensions too? Happy to be proved wrong though.

you may be right

[AtW]

The funds were holding gilts. Gilts are/were 'safe'.
The banks did the margin call on the funds as the arse fell out of the gilts market.
Or that's what I gathered from some research googling last night.

The issue is that pension funds engaged in marginal trades (otherwise there would have been no margin calls).

This should have never been allowed in the first place (to anybody, but at the very least not to regulated pension funds).

[Whorty]

you may be right

Woo hoo ... that's a first

[vetran]

Woo hoo ... that's a first

Millions of warty's with Typewriters?

[AtW]

It gets better….


”The sharp moves in gilt yields sparked demands from some asset managers for clients to stump up extra cash to cover shortfalls in their derivatives positions. Some pension funds were forced to sell gilts to raise cash, exacerbating the market mayhem. BlackRock, which sits between the pension schemes and banks on such derivatives trades, told its clients that it would no longer demand additional collateral. BlackRock is “not proceeding with any further recapitalization events until further notice”, said the email to LDI clients, which was seen by the Financial Times and was sent at about 11am, before the Bank of England announced its emergency intervention to stabilise the gilt market. Fogarty said: “If you run out of collateral they were saying, ‘we will close the position’, without going back to ask for more money from the fund. It is protecting their positions against contagion but it is not protecting their pension funds.” He added that other LDI managers put in place similar restrictions. A pensions expert said: “BlackRock would have been on the hook for a default in its LDI funds if it had not taken these steps and that is obviously a reputational hit that it wanted to avoid.”

https://www.ft.com/content/0f32fdf3-...0-d087860cfe6c

Noice… so it was even worse than just margin calls - excellent market oversight…

[Whorty]

Millions of warty's with Typewriters?

Seriously fella. Stop trying to infect every thread with your obsession of me. I'm sure everyone else is finding it tedious